26 minute read
ASSOCIATIONS IN ACTION
Conference Participation Can Transform the Industry
With three years of conference planning under my belt, I have learned some things about our industry’s commitment to education. There are many asset protection executives who see real value in attending industry conferences, like RILA’s Retail Asset Protection Conference, and maximize the experience by bringing teams or leading a session.
I have the privilege to work with executives on RILA’s Asset Protection Leaders Council and Loss Prevention Steering Committee (LPSC) who are dedicated to their own and their team’s personal and professional development through education. Members are quick to volunteer to present at the conference, or “volunteer” a team member to present, and have solid showings of team members in attendance. But, I have also learned that there are many industry executives who have a tendency to under-value the educational opportunity an industry conference can offer and they are not chomping at the bit to lead a session.
My training as a litigator and college professor taught me to search outside myself for answers, value teaching moments, and embrace public speaking. I’ve always seen these “outcomes” as benefits, having no downside. That is, until now. In fact, my passion for education can work against me when planning our asset protection conference.
It Comes Down to Expectations
I assume my industry peers share my passion for education, my desire to learn from others who are smarter than me, and my love for teaching others, all in an effort to advance the industry. Imagine my disappointment when AP executives ask for “exhibit hall only” passes at the conference. The notion of attending the conference and opting out of the educational sessions is hard for me to grasp. I can’t help but think, “You’re making the effort and incurring the expense to be here; why not learn something while you’re at it?”
This reminds me of an executive who told me that the day he needs to look outside his organization for answers is the day he will retire. Or, when someone recommends that we open the exhibit hall earlier in the day before retail attendees come down with a bad case of “information overload” from the many thought-provoking sessions that usually precipitate their arrival to the showroom floor. Or, when I notice that of the nineteen sessions slated to be led by retailers at the 2013 conference (as of the time this article went to print), only five were developed through speaker proposals. Translation—26 percent of retailer speakers volunteered to lead a session without prodding.
Don’t get me wrong. We believe the conference program is best-in-class, with seasoned executives sharing cutting-edge information (more about that later in this article). My only point is that it took some effort on RILA’s part and that of our LPSC to get there. Finally, despite record-breaking attendance year after year, truth be told, it represents only a fraction of the industry.
LaBruno leads the asset protection offerings in the areas of loss prevention, retail crime, workplace safety, disaster recovery, operational audit, research, and benchmarking for the Retail Industry Leaders Association. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs, and more than 100,000 stores, manufacturing facilities, and distribution centers domestically and abroad. LaBruno can be reached at 703-600-2024 or lisa.labruno@rila.org.
Reasons to Participate
There are perfectly legitimate reasons for less than industry-wide commitment to education and teaching through conference participation; reasons such as budget constraints, staffing challenges, and schedule conflicts. But, when those are set aside, I am left wondering whether there exists a lack of interest or a lack of awareness of the benefits for both the attendee and the company he or she represents.
I can think of many reasons AP executives may want to present at our conference. Some are looking for new opportunities or personal recognition. Others want to showcase their team and their company, which can be an effective recruiting tool. Others believe in advancing the industry through information-sharing. Others are simply passionate about the retail industry.
As driven professionals looking to advance our careers, shouldn’t we strive to be recognized and respected by others within the industry? RILA conference speakers demonstrate thought leadership, expertise, and passion. Isn’t that an image we all should aspire to portray? I am hard-pressed to think of a better way to market oneself than by sharing your intelligence and experience to a large peer group.
Great leaders inspire action. One presentation can change how others think, act, and operate. I recently came across this quote:
“Professionals who share knowledge, experience, and passion for their industry are in an important way transforming the lives of others, while at the same time gaining a sense of noble satisfaction.”
I don’t know about you, but I don’t get many opportunities to transform the lives of others.
Additionally, there is real value that comes along with having access to top executives in the industry that you may not otherwise have by simply attending a conference. By co-presenting with another retailer, participating as a panelist, or facilitating a roundtable discussion, you have the opportunity to network and benchmark with other industry thought leaders. These interactions will undoubtedly expand your knowledge base, and the connections can be instrumental in developing future opportunities.
Finally, presenters who are willing to share the details of their work can get instant feedback about their own company’s initiatives. This frame of reference can be invaluable, as it is derived from an external and objective peer group.
Perhaps I’ve struck a chord with some of you who were otherwise predisposed to sitting on the sideline. Perhaps you will reconsider your own participation as a speaker. If so, take the initiative to give a presentation or lead a roundtable at RILA’s 2014 Retail Asset Protection Conference. You never know what great opportunities may come your way.
2013 Conference Highlights
For those still content to sit on the sideline, consider moving to the audience. There is still time to register for the 2013 conference. Year-after-year RILA and our LPSC strive to deliver a program that covers the full spectrum of retail asset protection.
Walter Palmer recently wrote an article in RILA’s Asset Protection Newsletter in which he questioned whether the AP industry is one-dimensional, putting so much emphasis on theft. In it Walter challenged readers to review the various industry conference programs for an answer to his question. I thought this quick snapshot of some of the general sessions slated for the 2013 conference may help answer that question: ■ Safety executives from Caterpillar, Dow Corning, and
Honeywell will share how they made it to the list of 2012
America’s Safest Companies. ■ A 25-year retired FBI special agent and expert forensic psycholinguist will share the results of her empirical research of factors in communicated threats that relate reliably to action by the threatener. ■ A panel comprised of retail LP pyramid heads having varied tenures will share their unique perspectives on a broad
range of topics, including how to achieve personal and organizational success, key challenges, and where the retail AP industry is headed. ■ A premier omni-channel fashion retailer will share the impact of doing business in today’s environment. ■ A leading authority on the future of global security, cyber-crime, and terrorism will provide a front-seat view into the digital underground on emerging technology and security trends that will drastically redefine the markets in which retail operates.
And, the conference breakout sessions offer something for everyone regardless of attendees’ focus area or experience. With tracks designated for audit and analytics; investigations; leadership and development; strategy and planning; technology and innovation; and workplace safety; the conference program is anything but one-dimensional.
In addition to covering a broad range of topics, it will deliver content that is relevant, forward-thinking, and, perhaps most importantly, actionable. When you factor in the networking opportunities and the chance to see and experiment with emerging technology on the showroom floor, the value that comes with attending RILA’s Retail Asset Protection Conference cannot be understated.
When registering his team for this year’s conference, one LP executive asked that we keep one registration a secret from the registrant. The executive planned to “reward” (his word, not mine) his team member with the conference registration in recognition for his solid performance. This is an example of an industry leader who sees the value in education and who prioritizes the professional development of his employees. It should come as no surprise that this same industry leader embraces the opportunity to teach others; he’ll be presenting at the 2013 conference as well.
To register for RILA’s 2013 Retail Asset Protection Conference, go to www.rila.org.
Check out the new EyeOnLP.com page for the latest videos of what’s on the mind of LP executives and solutions providers, plus assorted videos we think will interest the industry.
Some people are asking us, “What Is EyeOnLP?” We’re glad you asked. Video host Amber Virgillo gives you the scoop only as she can. EYEONLP
Conducting Proactive Online Investigations
over 300 retailers to proactively identify and remove stolen property listed on our site. Criminals use many online venues to sell stolen merchandise, and eBay continues to be the Internet industry leader in the effort to combat it. Our collaboration with retailers and law enforcement is well chronicled. Continuing with our partnership principals, we thought an instructional guide to demonstrate best practices when conducting online investigations would be valuable. Part one of this two-part column provides an insider’s view of searching for stolen product on our site.
Step 1: Know Your Merchandise and the Factors That Affect Pricing
An investigator armed with this knowledge may calculate pricing thresholds to highlight outliers in price and volume. ■ Understand your merchandise and the landed cost to focus on implausible listings and sellers. ■ Identify your high-shrink items at a description and SKU level. ■ Work with your shortage control team to focus on merchandise loss minus paper shrink issues. ■ Know where your high-loss stores are located, and what merchandise contributes the most to overall loss. ■ Know your clearance, BOGO, and loss leaders with understanding of the pricing cycle. ■ Partner with merchandise buyers and planners to be notified of new hot products and the launch dates. ■ Be aware of new and grand reopening store product giveaways and door busters. ■ Partner with your marketing department to obtain launch dates of coupons, loyalty and award programs, and the implications of the benefits on product pricing for members. ■ Partner with your inventory and shortage control team to understand the product life cycle from purchase order through the clearance process to jobbers. ■ Many retailers are using eBay as another way to reach their customer.
Check to see if your company is an eBay seller.
Step 2: Locating Merchandise Listings Outliers
Now that you have a clear understanding of your high-shrink merchandise and true cost, you are ready to locate listing outliers. There are several tools that can help accomplish this. ■ The eBay Advance Search ebay.com/sch/ebayadvsearch/?rt=nc,
Located on the eBay site, it searches current and recently completed listings by merchandise description category type, price range, zip code, and user ID.
You can review feedback history for items sold and the selling prices. ■ GetMarketPrice.com
This free site provides searches by product for any currently listed items that sell for over $100. The reporting returns the current average list pricing and recently ended auctions averages of price and listing duration. The outliers of current listings are plotted on a scatter graph. The graph is interactive and
allows the user to click on the outlier then directs you to the listing on eBay. ■ Terapeak.com
A subscription-based search tool provides the investigator searches of completed listings by product, seller ID, and category going back one year. It has a reporting feature that provides the top sellers of specific merchandise and the ability to create basic exceptions reporting that is emailed to you on a daily, weekly, or monthly basis. Terapeak provides free training videos to walk the subscriber through each function of tool. ■ ORC Workbench orc-solutions.com/products/products.htm
This subscription-based site provides a site search and case management tool in one. It provides the capability to search seller listings by city, state, or zip code with built-in links to social media sites.
Dave DiSilva is a member of eBay’s Global Asset Protection team. Continuing with our partnership principals, we thought an instructional guide to demonstrate best practices when conducting online investigations would be valuable.
Step 3: Review the Seller’s Business Plan
Now that you have identified a seller that is potentially involved in criminal activity, calculate the profitability of the seller. Try using this free pricing and profit calculator: ecommercebytes.com/cab/tools/calcs/ebay_fee_calculator ■ Cost of Goods—Using your cost of an item and knowledge of lowest markdown price, BOGO history, and coupons available, calculate the lowest price. ■ Cost to List—Using the eBay fee calculator, determine the approximate fees. ■ Cost to Ship—Determine the approximate shipping cost by carrier minus the shipping charged by the seller. ■ Sales Volume—Evaluate the sales volume and price of the merchandise to determine if the pricing is realistic and sustainable. ■ Profitability—Determine the profitability by using the following formula: (Listing Price) – (Cost to List + Cost to Ship + Lowest Cost to Acquire
Merchandise) = Profit/Loss.
If your calculation returns a loss on substantial volume, you may have a criminal seller or an employee discount abuse issue. If the business plan returns a loss greater than your employee discount rate, you may have located a criminal seller.
In the next column we discuss next steps, searching other online venues for stolen goods, and the available tools to help.
Feature
tuning uP
LP For greater horsePower and Better PerFormance
ORgAnIZATIOnAL CHAngES AT PEP BOyS
It’s always refreshing to see a company that’s been in operation for nearly a century adapt new technologies and move away from old ways of doing business. There is somewhat of a danger in being in continuous business for that long—the danger of complacency; the danger of thinking “We’ve always done it that way;” or even the danger of simply bucking change for the sake of taking a safe, risk-free position.
Pep Boys is a company that has seen substantial change in the ninety-one years it’s been in business. This American auto parts icon hardly needs an introduction. Originally founded in 1921 as a single retail location in Philadelphia, Pep Boys is now a $2 billion powerhouse that operates over 700 stores throughout the U.S. and Puerto Rico, as well as running over 7,000 service bays.
It’s a multi-faceted business operation that caters to all aspects of the consumer automotive industry, from parts and service to shade-tree, do-it-yourself mechanics. Pep Boys thoroughly embraces the unique American love affair with the automobile, and carries thousands of aftermarket parts for customizing your ride; a pastime that is perhaps more important to Americans than any other culture in the world. If it belongs on a car or truck, there is a good chance Pep Boys can sell it to you, fix it for you, or upgrade it.
A Multifaceted Loss Prevention Landscape
It’s hard to encapsulate the loss prevention challenges endemic to Pep Boys without having a good feel for the landscape of this very diverse company. While Pep Boys has the usual retail challenges, it must also contend with some issues that are peculiar to the type of business it conducts, which is more or less unlike anything out there. The business model isn’t solely retail, it is also comprised of a service
segment with lots of parts, tools, and other consumables to track, as well as a massive reverse logistics model to track core returns. On top of that, Pep Boys also has five distribution centers, where the chain’s gargantuan parts supplies are stored. Finally, there are over 19,000 associates who work in the stores as well as the distribution centers.
In charge of the company’s loss prevention efforts and directly in charge of this formidable array of hydra-like problem areas is Bryan Hoppe, who was recently promoted to the position of vice president of store operations. Up until this promotion, Hoppe was the vice president of asset protection; a position he held for four years.
Not only is Hoppe a career loss prevention and operations professional, he’s also a career auto parts expert. Hoppe got his start in the industry in 1995, when he began a stint with Western Auto Supply Company, where he was a store manager for two years. After that, he embarked on a ten-year career with auto parts giant Advance Auto Parts, where he started as a store manager. By the time he left Advance in 2008 to join Pep Boys, he was in charge of asset protection for the company.
While career loss prevention executives aren’t particularly rare, it’s definitely rare to see an executive who has worked within the same industry segment for his whole career. Typically, loss prevention executives tend to cross-pollinate, moving from retail segment to retail segment, even though the actual product each company sells might be totally different. In this case Hoppe brings a remarkable amount of focused expertise from which Pep Boys can directly benefit.
Bryan Hoppe
The Way Things Were
When Hoppe came on board in 2008, he found Pep Boys to be pursuing an asset protection model that was, for the most part, outdated. “We were following an SOP-based model,” says Hoppe, “a model where we would conduct lots of investigations
and audits.” As a matter of fact, Hoppe found that the LP staff in place included top-notch professionals who believed in what they were doing and gave asset protection their best efforts. Whereas a substandard AP model can oftentimes be blamed on substandard personnel, clearly, this wasn’t the case at Pep Boys. It was just a matter of the way they were looking at the problem.
Hoppe has an interesting, but poignant anecdote to describe the problem: “When someone walks into a Home Depot and asks for a drill bit, what do they really want?” he muses. “They want a
Whereas a substandard AP model can oftentimes be blamed on substandard personnel, clearly, this wasn’t the case at Pep Boys. It was just a matter of the way they were looking at the problem. Hoppe has an interesting, but poignant anecdote to describe the problem: “When someone walks into a Home Depot and asks for a drill bit, what do they really want?” he muses. “They want a hole. That’s the problem. We were so focused on the drill bit that we lost sight of the hole.”
hole. That’s the problem. We were so focused on the drill bit that we lost sight of the hole.”
Essentially, what the LP department of Pep Boys was trying to do was to kill the shrink problem with standard operating procedures, almost, in a sense, trying to legislate the shrink problem out of existence. Areas of shrink would be indentified, and then large, detailed, and expansive audits would be performed. The audits would in turn prompt the genesis of a new series of rules, procedures, and checklists that needed to be followed by the individual store—all the while completely missing what the root cause of the shrink problem was in the first place. “Our entire shrink plan was SOP based, with not a lot of root-cause analysis,” states Hoppe, “We were doing things that
were industry best practices for years, but we wound up with hundreds of SOPs.”
As with other companies, Pep Boys also had a strong investigative loss prevention model that focused heavily on investigations, both for internal and external theft. The investigations model is a vestige of early loss prevention efforts, a mindset of cops versus criminals, and curiously, it still pervades modern loss prevention even though it’s been proven multiple times in different market sectors that outright theft isn’t usually the major cause of shrink within an organization. “We were seeing shrink as a theft problem rather than a business problem,” says Hoppe.
All of these audits and SOPs were eventually becoming burdensome to the stores and store managers, who simply couldn’t keep up with the rules and procedures being pushed down from above. “With all the stuff a store manager has to think about, you’re getting his attention for around 15 to 30 minutes per week,” states Hoppe, who soon realized he needed to remove burdens from stores, rather than add to them. “In my mind there are three different types of loss prevention organizations. The first is the police/audit type, where everything is a criminal investigation. The second is the consultant culture, where extensive rules are developed and an attempt is made to legislate shrink out of existence. The third is what I call ‘operationalizing the LP,’ and that’s what we went with,” says Bryan Hoppe of the organizational change made at Pep Boys.
Turning the Rudder
It didn’t take Hoppe long to realize that the ship needed to change course. He took stock of his situation, and found himself surrounded by quality and seasoned loss prevention professionals, but ones who needed a new focus. According to Hoppe, “In my mind there are three different types of loss prevention organizations. The first is the police/audit type, where everything is a criminal investigation. The second is the consultant culture, where extensive rules are developed and an attempt is made to legislate shrink out of existence. The third is what I call ‘operationalizing the LP,’ and that’s what we went with.”
Even though you might not find “operationalizing” in your dictionary, Hoppe’s concept of the idea definitely bears looking into. Essentially, Hoppe implemented a structure in which loss prevention professionals started to perceive themselves as business partners with operations. They began to take ownership of loss prevention problems rather than blaming it on another department or even some unseen thief. “Cradle to the grave, we now own the
shrink problem,” states Hoppe. “We all share the responsibility to manage shrink.”
An excellent example of this was Pep Boy’s move to have high-shrink products spider-wrapped at the distribution centers as well as reaching out to vendors to have them rethink their packaging rather than letting the stores deal with the problem. It was a classic loss prevention problem—certain products were packaged from a sales standpoint rather than from a security standpoint. In the old way of doing things, “We would build an extensive audit and then update the SOP,” says Hoppe. In the new way of doing things, “We had the distribution centers wrap the merchandise. They’re set up to do that, while the stores aren’t.” The solution not only solved that particular shrink problem, it shifted the burden of dealing with that problem away from the stores and onto the distribution center, which was better equipped to deal with it. “We needed to take the job of merchandise protection out of the stores,” states Hoppe.
Ownership of shrink is also a big theme in Hoppe’s master plan. He describes former practices at Pep Boys like this: “In the past, we’d send an auditor to a store. Twenty-one days later, an investigator might come by. Seven days after that, perhaps an AP manager would pay the store a visit. Then there would be a question; who owns what?” This example illustrates the overlap in duties, as well as the complete lack of ownership of the actual responsibility for the problem.
Like many loss prevention executives who have seen the light on outdated LP models, Hoppe started out in part by eliminating certain roles within the LP department. The investigator role and the auditor role were axed, with those personnel shifted over to the larger, more overarching asset protection role. Hoppe then modeled the organizational structure of these personnel after the operations division. For each operations position, a corresponding asset protection position was created, and thus the area and divisional levels of operations and LP became perfectly aligned. Currently, each AP manager is responsible for everything shrink and claims related within the stores under his control.
New Ideas and New Technology
Hoppe’s new ideas came in the form of an “eye-level” shrink program, comprised of three separate components. First off was the requisite corporate culture change needed in order to convince non-asset protection employees that AP was important and reducing shrink was everyone’s responsibility. This was followed by innovation, which comprised of SOP refinements and the building of a better AP process. Finally, some investment was inevitably needed to equip Pep Boys with a much needed shot in the arm technology wise.
Part of Pep Boys’ technology purchase was devoted to the widespread roll out of CCTV systems and DVRs, which the company had previously not devoted much attention to. This also helped the company curb in-store theft as well as the inevitable shrink and accidents that are associated with Pep’s service-bay operation.
One of Pep Boys’ biggest process refinement and technology rollouts revolved around the reverse logistics model that necessarily pervades their operations. It’s a problem that’s peculiar to auto parts and similar stores, and it revolves around the concept of a core charge. The way it works is that the customer orders an auto part, and besides the cost of the part itself, the customer is charged what is known in the industry as a “core charge.” The customer then installs the part he or she purchased, and brings the old part back into Pep Boys, and is subsequently refunded the core charge fee. From there, Pep Boys sends the old part to be refurbished and then the refurbished part is sold again, starting the process over again.
With this model, the customer had an overwhelming incentive to return the old part, because they inevitably wanted a refund of their core charge. Pep Boys associates, however, had no such incentive, and subsequently, many core return parts were thrown away, forgotten, or lost, resulting in a huge expense. Realize that without the rebuildable core, Pep Boys can’t resell that part, and the part therefore becomes a loss to the company. “Ninety-five percent of our reverse logistics never made it onto the pallet,” says Hoppe, speaking of the way it used to be. “It was process shrink, not theft.”
Hoppe decided to curb this by giving each core part a bar-coded “license plate.” Now, when a core part is returned, it’s scanned into the system and tied to a manifest. Hoppe and his team can now tell whether that part made it onto the pallet, and subsequently made it to the distribution center. “Before, there was a lack of buy in at the store level. It resulted in a big, black hole at the end of the year,” says Hoppe.
Associates were also polled, asking their opinions on the AP process in general. During this process, it was noted that the conventional LP awareness program using posters that were posted in each retail location were universally disliked and seldom if ever read. Hoppe and his team replaced these with a fun course and more personalized instruction at the behest of employees, which has thus far turned into a success. In addition, the program includes an online training technology that encourages associate participation and reinforces the messaging (see sidebar page 46).
The Road Ahead
With current shrink numbers literally a shadow of what they used to be, one would think Hoppe would have every reason to sit on his laurels and simply keep going in the same direction, but he’s not. This may be part of the reason he was promoted to the coveted role of VP of store operations. While AP still falls under Hoppe’s
continued on page 46
Hoppe’s new ideas came in the form of an “eye-level” shrink program, comprised of three separate components. First off was the requisite corporate culture change needed in order to convince non-asset protection employees that AP was important and reducing shrink was everyone’s responsibility. This was followed by innovation, which comprised of SOP refinements and the building of a better AP process. Finally, some investment was inevitably needed to equip Pep Boys with a much needed shot in the arm technology wise.
continued from page 44
jurisdiction, he could have easily filled his old spot with one of his protégés. However, he decided to take a different course of action, hiring LP industry veteran Kevin Cook to lead the charge. Cook is also a veteran of Advance Auto Parts and is extremely results driven. When asked why he would Kevin Cook recruit someone outside the company rather than promote from within, Hoppe stated, “I knew he would come in and question everything I did. Kevin’s mandate is to improve on what we have right now, not what we had four years ago.”
It’s an interesting philosophy to be sure, and it’s a bold one as well, since all of Hoppe’s decisions will be scrutinized for efficacy at his own behest. Putting a fresh set of eyes on what Pep Boys has been doing for the last four years under Hoppe’s watch is also incredibly humble, to say the least. That’s mainly because Hoppe is trying to build a leaner, meaner Pep Boys rather than trying to validate his accomplishments. “He’s going to revisit everything I’ve done,” states Hoppe.
Challenging Conventional Thinking in LP Awareness
As part of the philosophical changes implemented by Bryan Hoppe at Pep Boys, the company’s conventional awareness program was replaced with different messaging as well as new communications technology to gain both sustainable and measurable impact with their 19,000 associates. The results have included a 95 percent voluntary participation in the awareness initiative that has helped create a significant cultural shift throughout the company.
In September 2012 the magazine hosted a webinar where Hoppe talked about some of the changes in their awareness program. Christine Tutssel, vice president of sales for Axonify, discussed their communications technology that Pep Boys uses as part of this program.
The archived webinar is available on the magazine website, LPportal.com, for anyone interested in hearing the Pep Boys story. you may also scan the QR code here to register to listen to the webinar, sponsored by Axonify.
ADAM PAUL is a business writer based in Los Angeles, California, and an ongoing contributor to LP Magazine. He can be reached at AdamP@LPportal.com.
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